Many cities today are balking at the notion of issuing public subsidies just to keep companies in their town. But don't tell that to the City of Colorado Springs, Colo., where the U.S. Olympic Committee (USOC) has occupied a cramped, nondescript building downtown for the past 30 years.
Last year the organization put out a request for bids to host its marquee name elsewhere. At stake: Colorado Springs stood to lose an estimated $316 million in annual economic benefits and 4,800 sports-related jobs if the USOC were wooed away to one of 10 cities that were vying for the prize.
In a deal finalized this spring, the city is partnering with local real estate developer LandCo Equity Partners, the State of Colorado Office of Economic Development and International Trade, the local El Pomar Foundation and the Downtown Development Authority on a $53 million incentive package to fully fund the project costs. The deal effectively keeps the USOC and the Olympic Training Center in the city for at least the next 25 years.
Ultimately LandCo was in the right place at the right time. The cornerstone of the incentive plan is the development of a new six-story downtown office building at 27 South Tejon Street to house the USOC headquarters and its 400 employees in 90,000 sq. ft. of space. LandCo will also renovate a building adjacent to America the Beautiful Park to house the Olympic sport national governing bodies. Improvements at the nearby 34-acre Olympic Training Center include 158 new housing units for athletes who are in residence during training throughout the year, expanded dining facilities and upgrades to the visitor center.
LandCo beat out four local developers largely because it was already well underway with plans to redevelop an old furniture store into a 130,000 sq. ft. office building when the city came calling. “The city was going to lose the deal and couldn't compete with the other bidders,” says Ray Marshall, LandCo's chairman. “They really needed to beat other cities by two years and deliver in 2009, and we agreed to put our assets and our building into the equation to help the city.”
Jim Didion, former chairman of CB Richard Ellis, served as the USOC's volunteer consultant in searching for a new corporate home. “You have to make the assumption that we would have gone if the city had not been as responsive as it was,” says Didion. “We had proposals from other places that were very good.”
Chicago, which is the only other bidder to go public with its proposed incentive package, offered space in the Sears Tower as well as primo signage atop the 110-story skyscraper. But for the USOC, staying put is a sweet deal. The USOC will pay only $1 per year in rent and will own its space in the new headquarters outright in 25 years.
In return, the city keeps a marketable brand and a major tourist attraction. LandCo becomes the official real estate adviser to the USOC and has use of the Olympic marks, rings and logos for 25 years. Plus it retains the 40,000 sq. ft. ground-floor space in the new headquarters building to develop into a retail establishment.
“When the Olympic Committee moves in, that's probably the most valuable retail space in Colorado,” boasts LandCo's Marshall. To capitalize on the situation, he is pursuing a joint venture to produce an interactive Olympic experience along with a new hall of fame.